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Petitioner's share of the cash portion of the purchase price was
$16,000. Of that amount, petitioner paid $2,500 as earnest money
when the contract was signed. Also on June 19, 1990, Essex
redeemed the certificate of deposit, and thereafter disbursed
$20,843 to petitioner and bought two certificates of deposit for
$10,000 each. Petitioner deposited the $20,843 he received in
his account with United Carolina Bank. Petitioner used the two
certificates of deposit as partial collateral for a $50,000 loan
to renovate the East Boulevard property.
D. Petitioner's 1990 Tax Return
On the Form 8824, Like-Kind Exchanges, attached to
petitioner's 1990 income tax return, petitioner reported that he
transferred property as part of a like-kind exchange on February
21, 1990. In fact, petitioner transferred his interests in the
Monroe Road and Seventh Street properties on February 5 and
February 14, 1990, respectively. Also on that Form 8824,
petitioner reported that he identified replacement property on
April 1, 1990. April 1, 1990, is the 46th day after February 14,
1990, and the 55th day after February 5, 1990, the dates that
petitioner transferred his interests in the Seventh Street and
Monroe Road properties, respectively.
OPINION
A. Background and Contentions of the Parties
The issue for decision is whether petitioner may defer the
gains realized on the sale of the Monroe Road and Seventh Street
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